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Linn Energy, LLC (LINE) Message Board

  • prius_driver prius_driver Mar 11, 2009 12:00 PM Flag

    OT: COS-UN.to BB

    BadBernanke,

    previously we discussed the Syncrude operation and the effect of $35/bbl USD with their estimated $45/bbl CAD all in production cost. Happily, CL has risen to $45/bbl, which is almost $56/bbl CAD giving COS positive cash flow once again. A recent report suggests Syncrude is selling at $57 confirms my estimate above. I would also assume, perhaps foolishly, that the $45/bbl cost will go down with the lower price of NG, as Syncrude burns NG to produce CL.

    I'm curious if you have studied COS as an investment? The main attraction is that they have a 45 year RLI.

    Cheers,
    PD

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    • I watch COS and Encana principally for the oil sands cost and development data they provide. I sold my holdings just after the 5:1 split some time back.

      With current oil prices, it does look like the company should be back to at least break even cash flow overall and positive operating cash flow. One aspect of its finances that I am aware of but have not investigated further is that it does have US $ denominated debt, which has become much more costly to service in Canadian dollars at current exchange rates.

      I have always liked COS, but I don't know what it is saying about maintaining its current model after tax changes hit in 2011. Given the high costs associated with expansion, it is highly capital intensive on the front end of any growth -- I don't recall the extent to which Syncrude drives COS' cash flow dollars for growth, but there must be an agreement between the companies about how funding for growth occurs. Have you looked at that?

 
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